For nearly a year employers have been wondering whether employees are really entitled to receive additional wages each time they are unable to take a required rest break. This question arose after the Oregon Court of Appeals decided Gafur v. Legacy Good Samaritan Hospital and Medical Center, holding, in effect, that employees were entitled to receive 4 hours of pay for only 3 hours and 50 minutes of work. Our firm joined others in the fight to challenge the validity and reasoning of this opinion, and we are pleased to report that on May 15, 2008, the Oregon Supreme Court reversed the lower appellate court’s decision and held that employees alleging rest break violations do not have the right to bring a civil lawsuit for the recovery of unpaid wages.

Factual Background

Oregon’s meal and rest break rules generally require that employers provide employees with paid rest breaks of not less than 10 minutes and an unpaid meal period of not less than 30 minutes. Although there are limited exceptions (i.e., for certain employees covered by a labor agreement), most Oregon employers are covered by these rules. The number of required rest breaks and meal periods depends on the number of hours an employee works each day. For example, and employee who works a typical 8-hour shift would be entitled to at least two paid 10-minute rest breaks and one unpaid 30-minute meal period.

Prior to June 2007, employers thought and successfully argued that because rest breaks are paid, if an employee missed a rest break the only possible remedy was an administrative penalty ($1000 per violation) assessed by the Oregon Bureau of Labor and Industries (BOLI). Unlike a claim for unpaid wages or overtime, the underlying statute did not provide employees with a right to sue their employers for additional wages if they were required to work through a rest break. On June 13, 2007, that all potentially changed following the Court of Appeals opinion in Gafur v. Legacy Good Samaritan Hospital and Medical Center I. See Bullard’s June 14, 2007 eAlert.

The rules provide for paid rest breaks; according to the Court of Appeals’ decision, this means that the failure to provide a rest break would short the employee 10 minutes of pay for each missed rest break. In essence, an employee was supposed to receive 4 hours of pay for only 3 hours and 50 minutes of work; if an employee worked through a rest break, the employee should have received compensation to reflect the 10-minute disparity between hours actually “worked” and hours paid. The Court of Appeals also rejected Legacy’s argument that there is no private right of action in court for an alleged violation of the rest break requirements and permitted the class action plaintiffs to proceed on a claim for unpaid wages associated with missed rest breaks. Legacy appealed the decision, and the Oregon Supreme Court issued an opinion this morning reversing the Oregon Court of Appeals decision: there is no private right of action for rest breaks and employees are not entitled to receive additional wages if they miss a rest break. Gafur v. Legacy Good Samaritan Hospital and Medical Center (May 15, 2008).

Oregon Supreme Court Holding

In its well-reasoned opinion, the Oregon Supreme Court carefully considered and reviewed each applicable law and rules to determine whether a right to additional wages really existed for a missed rest break, and if so, what remedy might exist for a violation.

The Supreme Court found that BOLI has the authority to issue rules regulating the “minimum conditions of employment… as may be necessary for the preservation of the health of employees.” The rest break rule is one such rule – it is intended to benefit the employees’ physical and mental well-being; it does not, however, provide an entitlement to wages.

The Supreme Court further determined that employees are “working” while on a rest break, even though they may perform no work, because they are under the control of the employer at the time of the break and they are not able to use the time effectively for their own purposes, much like “waiting time” under OAR 839-030-0041(1) or “on call” time under OAR 839-020-0041(3). Therefore, the Court concluded,
 

“…an employee who works four hours and takes a 10 minute rest break within that four-hour period ‘works’ the same amount of time (for wage and hour purposes) as an employee who works four hours and does not take a rest break. In each circumstance, the employee is entitled to four hours of pay and no more.”

In line with this reasoning, the Court held that an employee who was not provided a rest break but was paid for four hours of work received wages for all hours worked during that shift and, as a result, may not bring a wage claim under ORS 653.055 for unpaid wages associated with a missed rest break. This means that an employee’s remedy for a missed rest break remains, as employers originally thought, in the hands of BOLI and the penalty it may assess for violations.

Speaking of that BOLI penalty, it is certainly not something you should overlook or dismiss. BOLI has the authority to assess a civil penalty against an employer of up to $1000 for each intentional violation of the meal and rest break rules. ORS 653.256(1). BOLI also has the authority to seek criminal prosecution of an employer who violates the rest break and meal period requirements. Violations can be punishable as a misdemeanor. ORS 653.991.

Guidance for Employers

The Gafur decision issued today emphasizes the importance of following the rest break requirements and ensuring that every employee receives – and takes – the appropriate number of rest breaks and meal periods during the course of an employee’s shift. Interestingly, BOLI just issued proposed rules that strengthen this requirement. (See May 5, 2008 proposed regulations.) We realize it can be a difficult task to ensure compliance by all employees, but it is an issue worth taking seriously and addressing immediately. When implementing rest breaks, keep the following rules in mind: